The “Robin Hood” CEO Who Famously Raised His Employees’ Minimum Wage to $70,000 Has a Dirty Secret

When Gravity Payment’s CEO Dan Price announced on April 13 that he would raise the minimum wage of his staff to $70,000 a year, the story went beyond viral: it took the media, especially the part of it which has been obsessing with income and wealth inequality which in the aftermath of Piketty would be most of it, by meteoric storm. Not only that, but the soon to be lionized young chief executive doubled down on this story of “purest of corporate nobility” by announcing he would cut his own compensation of $1.1 million to offset the cost.

Price’s story rocketed around the world, “a capitalist fairy tale to counter growing inequality.” As Bloomberg’s Karen Weise writes “with his tousled long hair and dark brown eyes, Price combined Brad Pitt’s smolder and Boo Boo Bear’s aw-shucks demeanor to become an articulate and attractive messenger. Rush Limbaugh denounced him as a socialist. Jesse Ventura christened him Robin Hood.”

By 3 a.m. the morning after the announcement, Price’s phone was buzzing. The Today Show wanted him the next morning, as did Good Morning America. He hopped a plane to New York. “I did something like 25 live TV interviews in three days,” he says. “We are really passionate about reforming credit card processing. This seemed like an opportunity—we could have a really big impact doing that.”

Fox News pilloried him. Actor Russell Brand, in a laudatory YouTube video, joked, “It’s difficult to ignore the fact that Dan Price looks a lot like Jesus.”

Price signed with the talent agency William Morris Endeavor Entertainment and now charges as much as $20,000 per speech, Pirkle says. Price told his team that the company was getting free booth space at Inc. magazine’s annual conference, in addition to a speaking fee. “In terms of what they’re paying us for a one-hour talk, we’re looking at well over $100,000,” he said. Inc. put him on its November cover. (Inc. didn’t respond to requests for comment.)

The idea came to him, he later told the media, after talking to a friend who earned less than he did. He’d read about a study showing that extra income improves the happiness of people who earn less than about $75,000. “It’s not about making money; it’s about making a difference,” Price told the Today Show, one of two dozen TV interviews he did in the days following the announcement.

When Price made his $70,000 announcement, he told his staff, “My pay is set based on market rates and kinda what it would take to replace me. And because of this growing inequality, as a CEO that amount is really, really high. I make, uh, you know, a crazy, uh, my compensation is really, really high.”

Gravity staffers plank during meetings to encourage each other to speak quickly.

As he’s recounted over and over, Price says his aha moment about pay came in late March, on the hike with his friend. “I realized that there were people I was working with—that I said I valued as partners, I said I really want to invest in—and they were making less than her,” he told The Daily Show’s Trevor Noah.

Overnight, he became the hero of progressives everywhere demanding lower CEO pay and higher worker pay.

And if his story was true, he could have indeed become the poster child for corporate nobility in an age of runaway executive pay.

Unfortunately for Dan Price’s enthralled fans and adoring media supporters, as a must-read expose by Bloomberg’s Karen Weise which digs below the surface of what now appear to have been very hollow words reveals, Price had a dirty secret revealing that his true motives were far different than what he disclosed repeatedly on prime time TV.

The lawsuit.

In the summer, the New York Times ran a longer piece on Price, now 31, showing that raising wages wasn’t so simple. Job applicants had overwhelmed his company, and two employees quit, saying the increase wasn’t fair to higher earners. “Potentially the worst blow of all,” the Times wrote, was that about two weeks after the announcement, Price was sued by his older brother Lucas, who owns about 30 percent of Gravity, alleging Price paid himself too much in the first place. Price insinuated that his brother may have sued in reaction to the generous pay increase. “I know the decision to pay everyone a living wage is controversial,” he told the Seattle Times, which first reported the lawsuit. “I deeply regret the rift this has caused in my relationship with my brother.”

The important detail to remember here is that suing Price was none other than his brother, Lucas, co-founder of the company.

As Weise continues, “an expensive lawsuit, filed possibly in response to his kind act, made Price seem more of an underdog.“

When I met him at Gravity’s headquarters in mid-October, he wasn’t even supposed to be in Seattle. He’d been scheduled to join Planned Parenthood President Cecile Richards and General David Petraeus on a panel titled “Leading Under Pressure” at the Chicago Ideas Week festival. But Price had canceled at the last minute, saying he’d hit a wall of exhaustion. “I think I’m just standing in for a bunch of other people doing great stuff,” he said. “To me the responsibility is to be the best spokesperson I can.”

As we talked about his wild six months, I brought up the lawsuit, asking if Price thought Gravity’s spending on the raises triggered his brother’s suit, as he’d implied. “I have no idea,” he slowly shrugged, looking right at me. “The quote in the Seattle Times from his attorney was, ‘It wasn’t only because of that.’?” He twisted his beard between two fingers, contemplating the statement by Lucas’s attorney, Greg Hollon. “That one singular quote in the paper is the only information I have about if they were connected or not.”

And now, some 8 months after the story first broke, the truth about Price’s true motives emerges:

It’s a poignant story, one that I almost wrote. Until I realized Price knew more than he was letting on. The lawsuit couldn’t have been prompted by the pay raise—if anything, it may have been the other way around. And his salary before the big announcement was unusually high. As I read through the court record and media reports, I began to see how Price was writing his own origin myth one interview at a time. With what he says is a $500,000 book deal, he’s solidifying his place as the next do-gooder businessman, joining the CEOs of bigger companies, such as Zappos’s Tony Hsieh and Whole Foods Market’s John Mackey. In the process, he’s surely become the only credit card processing executive to be feted by Esquire, courted by literary agents, and swooned at by women on social media who declared him “yum.” But how it all happened is a little more complicated.

Actually, it is not that complicated. As it turns out, the wage hike for his employees and his own personal wage cut was merely a self-defense measure in response to the lawsuit that had been filed before, not after, his stunning announcement. A measure that was wrapped in an unprecedented and carefully constructed media campaign designed to make him the hero. Here’s Bloomberg crushing the progressive’s image of their own personal corporate Jesus:

Two weeks after returning from the April media blitzkrieg in New York, Price told me, he was settling in at home to finally unwind. “I was going to watch my first soccer game since this had all happened,” he recalled. “My doorbell rang, and there was a legal courier. ‘Are you Dan Price?’ ‘Yes.’ ” Price said he was served with Lucas’s lawsuit. “I was shocked,” he said. “The soccer game got turned off pretty quickly.” It was during this recounting that Price told me how the comment from Lucas’s lawyer in the Seattle Times was the “only information I have about if they were connected or not.”

The possible retaliatory nature of the suit only adds to the drama of Price’s wage hike. “This is all speculation on my part,” Pirkle said in late September, before explaining how, as minority shareholder, Lucas gets paid dividends from Gravity’s profits. “Those profits are obsolete when you raise the wages. His brother’s, like, ‘That’s my money.’ ”

Pirkle suggested to me that the lawsuit could be part of a broader narrative about the purpose of business: “Is it to maximize shareholder returns? Or is it to best serve the customers and provide for employees?” Inc. hypothesized that Lucas filed the lawsuit after the pay increase “perhaps to pressure Dan to sell when Gravity was in the limelight, thus maximizing the value of Lucas’s share.”

There is just one big problem with all those scenarios: as Weise discovered, the lawsuit predates the raise.

Lucas did file the case two weeks after Price’s announcement, but according to court records, Price was served with the suit at his house on the afternoon of March 16—about two weeks before the fabled hike with his friend and almost a month before the wage increase announcement. Washington state allows litigants to serve a defendant before a suit is filed with the court. Hollon, Lucas’s attorney, says Price informed his brother of the pay hike with an e-mail on April 9, only five days before the New York Times and NBC descended on Seattle.(Pirkle said that in a later document, Lucas “specifically referenced” the wage hike as grounds for the case. Hollon responded that the May document added the pay increase as “one of the potential factual bases supporting the claims in the lawsuit” since “the wage program appeared to be a reaction by Dan to the lawsuit.”)

The lawsuit is light on details, but it claims that Price “improperly used his majority control of the company” to overpay himself, in the process reducing what Lucas was due. “Daniel’s actions have been burdensome, harsh and wrongful, and have shown a lack of fair dealing toward Lucas,” the suit alleges. It asks for unspecified damages and that Price buy out Lucas’s interest in Gravity. Hollon said the lawsuit was the culmination of “years” of efforts to resolve Lucas’s concerns. Price “on several occasions suggested to Lucas that if Lucas didn’t like Dan’s actions regarding Lucas’s rights as a shareholder, Lucas should seek legal remedies,” Hollon wrote in an e-mail. “Prior to the lawsuit, Dan had made clear that he would only engage with Lucas through Lucas’s counsel.”

Weise then asks the $70,000 question: “if the lawsuit wasn’t a reaction to the wage hike, could it have been the other way around? After all, Price announced his magnanimous act a month after his brother sued him for, in essence, being greedy. Lowering his pay could give Price negotiating leverage, too. “With profits, at least in the short term, shifted to salaries, there is little left over to buy out his brother,” the New York Times reported Price said.

She confronts Price with this discovery:

In a follow-up interview in mid-November, I pressed Price about the inconsistency. How could what he told me about being served two weeks after announcing the raise be true when the court records indicated otherwise?

“Umm, I’m not, I have to look,” he said.

The court document, I said, definitely says March 16.

“I am only aware of the suit being initiated after the raise,” he replied.

“The court record shows you being served on March 16 … at 1:25 p.m.,” I said. “And actually, your answer to it was dated April 3,” also before the pay hike.

“I am only aware of the suit being initiated after the raise,” he repeated.

I asked again how that could be, saying the declaration of service shows Price was served with the complaint, the summons, and other documents, “that you are a male, who is white, age 30, 5-feet-8-inches, medium height, dark hair.”

He paused for 20 seconds. “Are you there?” he asked, then twice repeated his statement that he was only aware of the suit being initiated in late April. “I’d be happy to answer any other questions you may have,” he added.

Any other questions, of course, except the one about the smoking gun which crushes his entire narrative of generous Robin Hood corporate CEO into pulp.

We doubt any of the fawning media outlets that chased Price in April and subsequently will care to point out this unpleasant outlier to the convenient narrative he had created for himself.

And while the date of the original lawsuit explains Price’s “generosity”, another secret may explain his desire for admiration and public adulation, one which if proven to be true, may quickly change Price’s public profile from one corporate saint into a personal demon. Here is Weise’s second revelation:

Price’s life may get more complicated the week of Dec. 7, when TEDx plans to post online a public talk by his former wife, who changed her last name to Colón. She spoke on Oct. 28 at the University of Kentucky about the power of writing to overcome trauma. Colón stood on stage wearing cerulean blue and, without naming Price, read from a journal entry she says she wrote in May 2006 about her then-husband. “He got mad at me for ignoring him and grabbed me and shook me again,” she read. “He also threw me to the ground and got on top of me. He started punching me in the stomach and slapped me across the face. I was shaking so bad.” Later in the talk, Colón recalled once locking herself in her car, “afraid he was going to body-slam me into the ground again or waterboard me in our upstairs bathroom like he had done before.”

I read those quotes to Price. “I’m just going to take a second because this is very surprising to me,” he said. He paused. “I appreciate and respect my former wife, and she played a very positive role in my life,” he said. “Out of respect for her, I wouldn’t feel comfortable responding to a supposed allegation she may have said coming from a Bloomberg Businessweek reporter when I have absolutely zero evidence of an allegation being made.” I told him that I wanted to be clear: I was giving him the chance to deny the claims. “My comment is very responsive,” he said. “I would be more than happy to provide a comment if and when I actually get the benefit of seeing what you are referencing.”

About three hours later, Price called back. “There’s one more thing that I would like to add to my previous statement,” he said. “The events that you described never happened.”

One aspect of Price’s saga is certain: Seventy employees at Gravity now earn far more than they did before. Was it altruism or a costly lawsuit that motivated it? If his book doesn’t provide answers, perhaps Lucas’s case, which goes to trial in May, will.

And, Weise ignored to add because it is self-explanatory, if these allegations going to Price’s true motives, and his spousal abuse are proven correct, all those very generous wage hikes will prove quite transitory as Gravity Payment’s clients desert the company one by one, leading to the company’s collapse. We wonder if the generous CEO will then take money out of his own bank account to bankroll the insolvent company and provide the needed funding for payroll and keeping his remaining employees happy, or he will simply max out his own compensation in as the company crashes and burns?

Much more in the full article from Bloomberg Businessweek